SEC Beefs Up Disclosure for Investment Advisers

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By Rob Tricchinelli

Aug. 25 — Investment advisers will face new disclosure requirements about their separately managed accounts, under a rule adopted Aug. 25 by the Securities and Exchange Commission (RIN:3235-AL75).

Separately managed accounts are typically offered through advisers but run individually, outside that advisers' pooled assets, such as mutual funds. Under the new rule, advisers will have to report on Form ADV their use of derivatives and borrowing.

The new rule under the 1940 Investment Advisers Act will also require advisers to keep records of how they calculate their performance claims to investors.

Better Understanding

“Requiring investment advisers to report this additional information will provide investors and the Commission with a better understanding of the risk profile of each adviser and the industry as a whole,” SEC Chairman Mary Jo White said in a news release.

“These amendments are an important step in a series of rulemakings to enhance the SEC’s monitoring and regulation of the asset management industry,” White said.

Under White, the SEC has proposed a series of asset manager rules, including data collection and disclosure; liquidity risk management and swing pricing; restrictions on funds' use of derivatives; and business continuity and transition plans.

Advisers will have to begin complying with the rule on Oct. 1, 2017. The rule was adopted without a public meeting. It was proposed in May 2015 (98 SLD 98, 5/21/15).

To contact the reporter on this story: Rob Tricchinelli in Washington at

To contact the editor responsible for this story: Phyllis Diamond at

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